Just bought a video store 4 months ago

[palovita]

hello,
I just bought my first business about 4 months ago and it was a video store I paid 15k for it and so far it only made 2.5k in 4 months my family is telling me to call it a lost and walk away and get what I can for it

the store been open since 94 but last owner put a bad rap on it customers that come in tell me the they were never opened  their prices were always high 2.50 per day on New release
I am charging 1.35 on new releases and 0.85 for old ones
and im open 7 days
PLEASE HELP NEED ALL input I can get
I have over 4k dvds and 1k vhs
whats every one thoughts on having a video store now a days ?


York video Littlerock Ca
Ces

[wannabevideostoreowner]

I do not own a store (I've just researched and considered owning one forever) but I could answer a lot of your questions based off of information I've read in this message board. So your biggest advice is probably to read this board. A lot. There is good information here. Go deep.

A video store nowadays has more competition then ever. The weakest links are struggling. You can probably make it a profitable business if you work at it. If you were looking for something too easy and aren't willing to work, then walking away would probably be a good idea.

My immediate suggestions:

1. Your pricing is too low. You don't really have to directly compete pricewise against Redbox. Pay-per-view is still charging $4.99. $1.99 (at least) is definitely not unreasonable. Raise catalog pricing too. Make rentals multiday or whatever you have to do.

2. If the last owner put a bad rap on the place, find out what they did wrong, make the appropriate changes, and let EVERYONE know that the store is under new ownership and about the changes. Do some marketing. Make sure the marketing highlights a) the new owner, and b) the changes. Make sure you have a big sign in front of your place that says "NEW OWNER"

3. Others will probably tell you to consider selling the VHS. But always look at your market and determine if these are still doing anything. If not, and especially if you need the space, start selling them.

[twinvid]

A. It doesn't sound like you did your due dilegence on the exsisting store before you bought it.

B. If you think that you can turn around ANY poorly run business in just 4 months then you are living in a fantasy world.

To turn around a badly run business could take a couple of years with supreme customer service and a lot of promoting and marketing the fact that the business is under new ownership.

If you are not willing to put forth those efforts then close it up now and be done with it and it doesn't really matter what kind of a business you are talking about.

Bob

[palovita]

I was thinking of having a fresh start New location and new name cuz the old name just isnt go no were

[moviecritic202]

If you Try to compete with Redbox at this point with your store you will only quicken your demise.  The trick is to offer what they can't.  First and foremost is selection, they can only hold about 500 dvds total.  Next, Customer Service (actually, this should be priority 1).  When you get new customers or returning ones who are curious about the new ownership you better be ready to impress them.

Find your store's specialty.  The chains specialize in quantity, Redbox in low price.  Yours could be catalog titles and rare titles, or adult movies, or most difficultly games.

As Bob said, It will take time to turn the store around.  You must be prepared to post a loss for awhile.

Also learn your customers tastes and know your area.

These are just my thoughts.  I have only been doing this for 6 years and only 2 as an owner.  There many others on this board who have much more experiance than I.  THINK OVER ANY AND ALL ADVICE THEY GIVE YOU!

[Thomas Williams]

Oh man. I think you just stepped in a pile of do-do. The VHS are worth nothing. Donate them to a charity and take a tax write off on those. Depending on the DVD titles that you have they are worth between $1.00 and $2.00 each. Some obviously more. Many, less than a buck. You didn't say if you are rural or city or suburban. It makes a difference. Are your rentals 1 day or multiday? In a rural environment you have to do multiday rentals. In a city you can do 1 day and MAYBE get away with it. Suburban stores are almost always multiday rental stores. If your software allows it maybe you could offer them a choice. 1 day for $X, 2 days for $X, 5 days for $X. On average you do $20 a day. That means only 10-15 people a day walk through the doors.
To have any kind of viable video business you have to have at a minimum $6000 a month in gross revenues or $200 a day. That's 10 times what you are doing now. If you don't have any idea of how to get there, maybe you should sell off the inventory and take a nice loss on your taxes next year. That may sound harsh but the reality is that video stores, large and small, are on the downward side of the growth cycle. Many will compete in their markets for a few more years because they have been there a long time or fill a specific niche market or are fixtures in their communities. Buying an existing but failing store was not a smart decision. Like another poster said, it doesn't look like you did your due diligence. At the very least you should have sat outside on a Friday or Saturday and done a customer count. That is a very simple and cheap way of getting a feel for an existing business. That and looking at the books or bank statements. Any owner that will not show you a bank statement is hiding how much revenue he takes in.

[Hardcopy]

What was he doing a week before you bought it?

[mcmarc]

I agree with everyone... did you do your research before buying this place? 

Too late now I guess.  The FIRST thing I would do would be to put a huge visible sign saying "under new management" or "new ownership with friendly service" or something like that.  Next, I will find old customers who haven't rented in awhile and lure them back with a coupon.

You cannot compete with Redbox so do not try.  I switched to per day pricing last year and we are doing well with it.  $2 for a new release and $1 a day after that.  Catalog is $2 for a week.

I partially agree about the vhs.  It might not rent, but you sure can sell it.  I wouldn't charge more than $2.  First though I would check the prices on amazon.com.  You'd be surprised what sells on there for a decent amount.  I would also look into the buy/sell/trade market.  I see that as the future for our stores.

I'm not trying to get your hopes up, but I bought a second store two years ago for 10k, sold it's vhs inventory for close to that, and it started paying for itself in six months.  You CAN make it work, but I'm sad to say that the odds are against you.

[Paradise Video]

Hi Ces,

I too bought a store about 4 months ago. Just curious, when you said it made 2.5k in 4 months, did you mean net income or revenue? Like everyone else said, it might be too late to regret now, so at least give it some time to pick up if you are planning to do something to grow it. And don't feel too bad, I paid more than twice the amount you paid, so I still have to put in new money every month to pay the seller financing now, while earning nothing.

[ThomPotter]

Just curious, when you said it made 2.5k in 4 months, did you mean net income or revenue?

That HAS to be net income. I got about the same amount of stock and I made twice that in late fees alone. And I'm in a small town.




There is one thing that I have been pushing that is doing great for me and that is TV series. Redbox doesn't carry TV (least not ones I've ever seen) and people are more and more these days getting sick of commercials and waiting weeks in-between shows that have continuing plot lines. Stock up on some popular TV shows. Try getting maybe some Showtime or HBO. Shows from channels not everyone has. I rent mine by the season. 1 season of any show regardless of length or number of discs goes for $8.00 and they get them for a week. If you get someone hooked on one show then you also have them hooked and all the other seasons of that show. Plus if they REALLY like the show and they know you have more, they won't have them out for a week. They're going to burn through those seasons quick and you're going to get fast turn around on a pricey rental.



Oh, unless that 2.5k was your total revenue... how could you even make rent, let alone new inventory?

[palovita]

unless that 2.5k was your total revenue... how could you even make rent, let alone new inventory?

my store is also a 2 bdrm 1 bathroom house some time in the 80s some one extanded it and build a store to it so now my back door is my front door and back yard is my front yard lol weird but nice
and the front of the house is a store.
 the store is on a major street and the front yard was turn in to  parking and all.

the store even has 2 rooms in it 3 if you count the main big room were the customers walk around. I use one room for my office and the other room the door is off and my check out counter is in front of it so I  can get the customers movies and video games.

and I live in a small town that right in the middle of a lot of little towns and then the big city

[palovita]

also I have a full time job that helps to pay the rent and new releases but like I said its startng to get a bit hard
when im working my wife runs the store or a family memeber and when im off im working in the store
altho it doesnt feel like im working since its mine I love it lol just want more income so I dont have to spend so much on it

[Paradise Video]

Sounds like it is revenue? At least you don't have to pay rent, which is what's killing me; so that's good.

[palovita]

Sounds like it is revenue? At least you don't have to pay rent, which is what's killing me; so that's good.

yea im glad it isnt that bad it was but we moved in the the house to cut some of the bills but things still not getting any better im still a month late on this rent

[genx-mike]

With all due respect, you need to liquidate this product and get out of the business. You are not bringing in enough income to make it worthwhile. The longer you wait, the less your inventory will be worth.